Q2 2023 NV5 Global Inc Earnings Call
Good afternoon, everyone and thank you for participating in today's conference call to discuss N V Fives financial results for the second quarter 'twenty to 'twenty three ended July 1st 2023.
Joining us today are Dickerson Wright, chairman and CEO of NV, five Edward Codispoti CFO of N V fives.
Alex Hockman, President and C O O N V five.
Harold.
L O N.
N V five and Richard Tong Executive Vice President and General Counsel at N V. Five I would like now to turn the call over to Richard Tong.
Thank you operator, welcome everyone to <unk> second quarter 2023 earnings call before we proceed I would like to notify all participants that today's presentation can be found on IR <unk> com and remind everyone that today's discussion contains forward looking statements about the company's future business and financial.
Performance.
These are based on management's current expectations and are subject to risks and uncertainties.
Factors that could cause results to differ materially from these statements are included in today's presentation slides.
And in our reports on file with the SEC.
During this call GAAP and non-GAAP financial measures will be discussed a reconciliation between the two is available in today's earnings release and on the company's website at Www Dot <unk> Dot com.
Please note that unless otherwise stated all references to its second quarter 2023 comparisons.
Being made against the second quarter of 2022.
In this presentation <unk> has included certain non-GAAP financial measures.
Finding of regulation G promulgated by the Securities Exchange Act of 1934 as amended and non-GAAP financial measures included in this presentation are adjusted earnings per share and adjusted EBITDA.
<unk> provides non-GAAP financial measures to supplement GAAP measures as they provide additional insight into <unk> financial results.
However, non-GAAP measures have limitations as analytical tools and should not be considered in isolation and are not in accordance or a substitute for GAAP and.
In addition, other companies may define non-GAAP measures differently, which limits the ability of investors to compare non-GAAP measures of <unk> those used by peer companies.
A webcast replay of this call and it's accompanied presentation are also available via the link provided in today's news release and on the investors section of the Companys website you.
You May also find today's presentation, which will be referenced during this call on the investors section of the company's web site. We will begin the call with comments from Dickerson Wright, Chairman and CEO of <unk> and turning the call over to Ben Horizon C O <unk> <unk> than <unk>.
Hearing from Alex Hockman, President and CEO of <unk> before turning the call over to Ed Codispoti, Chief Financial Officer for a review of the second quarter 2023 results.
Nickerson right will then provide closing comments before we open the call for your questions Dickerson. Please go ahead.
Thank you Richard and thanks to everyone for joining us today for this call.
The second quarter results exceeded our planned budget.
We're on track to meet the guidance previously given for <unk> three <unk> turning to page five not only was an improvement over quarter, one, but we finished the quarter above consensus. The results consisted of organic growth from our existing business, but also revenue and organic growth of acquisitions made prior to endure.
During the quarter number one.
In particular, the acquisitions of software and analytical services strengthens a stable foundation for growth and subscription based and reoccurring revenue.
We also announced some recent project wins that support and then has a sustainable infrastructure and assist the existing Adobe power grid.
We have begun to see in the federal infrastructure Bill materialize.
We have recently begun to see green shoots for our real estate transactional business with revenue, increasing but still not at prior rates we've.
We have established organic growth initiatives that can provide additional resources for our clients. We have structured the organization to have our most senior people spend additional time with our clients.
We feel that this will increase organic growth.
Perhaps we can now go to slide six which highlights our technology expansion with the acquisition.
Which was announced yesterday of Red technology in Singapore.
This increases our resources in the areas strengthening our mission critical data center support activity and promoting further organic growth in the Asia Pacific region. In fact, the acquisition will be a catalyst for further growth and adds to our existing employee base.
The employee base now numbers over 250 full time equivalents in the region I will now turn the presentation over to Ben <unk> and Alex Hockman to provide an update on the buildings and infrastructure businesses. Please turn to slide seven.
In 2020, we formed a highly focused division, but then the international team called NB five mission critical.
Idea was to provide a one stop shop for Blue chip clients. It was highly outcome driven.
I just needed a consultant that could rapidly bring international standards to unskilled markets.
The local regulations and culture.
Mission critical business is growing close to 400% since its founding and in the first half of the year and it's delivered 14% organic growth.
The acquisition of <unk> technologies expands our client base and service offerings in the mission critical space right.
<unk> technologies provides <unk> and <unk>.
Fiber optic consulting, which is both upstream and downstream systems design and commissioning services.
<unk> already worked together on a number of projects, we are very well positioned to vertically integrate our services and bring more recurring revenue into the business.
In the domestic market were also seeing areas of very strong growth.
The acquisition of Sage energy in 2021 boasted our clean energy group with expertise in renewables in the electric vehicle market services that are in very high demand right now.
As an owner's representative we engage in the early phase of a project, which often leads to downstream engineering work and other <unk> verticals.
At the beginning of this year, we formed a moving Digitization group during from our expertise in geospatial.
Building analytics and information modeling to provide scanned them and digital twin platforms to our clients. This.
This is now becoming a core part of our more traditional services such as MEP design and program management, bringing more value to our clients, allowing us to deliver projects more efficiently while growing our subscription base revenue.
Our technology and acoustics group is on track for a record year, we continue to be market leaders in higher education market, which is currently seeing a strong rebound since the pandemic.
We continue to diversify into other markets with recent master services agreements awarded with a large software and government entity.
Alex Hockman will now give an update on the infrastructure and utilities businesses.
Thank you Ben and good afternoon to everyone. Please turn to slide eight.
<unk> five has been at the forefront of sustainable planning design and construction to meet the demands of the population functionality and protecting our environment. We have participated in the institute for sustainable infrastructure and have been active in the development of envision.
Envision is a holistic sustainability framework and rating system that enables through a thorough examination of the sustainability and resiliency of all types of civil infrastructure.
Examples of infrastructure investments that protect our environment include the recently announced 16 million dollar New York City D. P Green water storm water project.
This project will include the design of an interceptor sewer system to address the concerns with combined huge outflow systems also known as <unk>.
When treatment plants are overcapacity untreated sewage is discharged directly into our waterways.
The design and construction of interceptor systems reduces the demand on treatment centers and drastically improves so the water quality of our rivers and oceans.
We are also starting to see projects, resulting from the infrastructure investment and jobs Act I I J a.
Which is also known as the bipartisan infrastructure law or B I L.
The B I L will make available more than one trillion dollars in funding for infrastructure programs across transportation energy and water sectors through a combination of grants loans and tax incentives.
Our Philadelphia office authored a successful raise grant application for Camden County, New Jersey announced in June 2023.
Through this grant Camden County, $119 billion for segments of the Camden County Trail, a 34 mile Trail through 17 municipalities, which NV five is designing raise.
<unk> is an acronym for rebuilding American infrastructure with sustainability and equity.
And our long Island office has performed grant writing services for counties and towns and are awaiting results of the application for federal funds for pedestrian safety and non motorized greenway programs.
We are in the early stages, but are well positioned to assist our public and private sector clients with grant writing design and project management services for these important infrastructure projects.
Multi disciplined approach of our utility services group has us well positioned to assist throughout the lifecycle of energy companies assets and capital improvement projects.
We are seeing increased activity across all of our areas of expertise, including transmission and distribution lines Substations gas LNG and the rapidly growing demand for EV charging stations.
Recently, a major west coast utility reported that underground in lines was by far more effective in reducing outages and preventing fires than attempting to mitigate fires through forest management.
<unk> has extensive expertise in all aspects and disciplines required to design and project manage these improvements and are projecting significant growth in the future at.
At this time I will turn it back to Dickerson.
Thank you Alex by turning to slide nine we will provide an update of our geospatial platform and we will speak about our continued success as well as our strategy for future growth. The geospatial platform provides three key solutions one it mitigates risks to it plans for growth and.
And three manages our existing resources.
As Ed Codispoti will mention later, we are increasing our investments to provide the most updated technology and to better address new markets data acquisition requires updated aerial measurement equipment.
Software solutions provide a competitive edge and embeds our relationship with clients with patented software solutions.
<unk> is by far the leader in analytical solutions for our clients. These solutions tailor the acquired data and user friendly solutions.
Going to slide 10, Youll see that we depict our backlog and key wins for the second quarter.
Youll readily see that our backlog grew 17% over Q2, 'twenty two or to Q2 last year, all the way through 800 million over a rolling 12 month period, our key wins touched most of our service offerings, our geospatial wins provide data for our government agencies, including the department of defense our.
<unk> enhances our delivery and energy efficiency for an existing utility grid, our geospatial technology investments will support our geospatial wins, we will now transition the presentation to our CFO Ed Codispoti to provide an overview of our second quarter performance go ahead Ed.
Thank you Dickerson and good afternoon, everyone. If you would please turn to slide 12 of the presentation I'll review, our second quarter 2023 financial results.
Our gross revenues were $222 6 million.
Compared to $202 $7 million in the second quarter of last year.
The 10% increase in growth was primarily fueled by our <unk> and <unk> acquisitions as well as organic growth in our geospatial business, which combined represented about $31 4 million.
Our topline growth was partially offset by decreases in our real estate transactional business revenue of $8 $3 million driven by market reactions to interest rates and decreases in our LNG business revenue of $3 million driven by the timing of project cycles.
Gross profit was $110 3 million compared to $99 2 million in the second quarter of last year, an increase of $11 1 million or 11% gross margin also expanded by 50 basis points. During this period.
Net income was $15 4 million in the quarter compared to $17 3 million in the second quarter of last year, a decrease of $1 $9 million.
Net income was impacted by amortization expense from acquisitions, which increased $3 2 million when compared to the second quarter of last year and interest expense, which increased $2 $8 million.
Additionally, our net income this quarter was affected by profit margins in our real estate transactional business due to market reactions to interest rates.
And profit margins in our LNG business due to the timing of project cycles as well as a reduction of acquisition earn out accruals.
I'll note that we did see resiliency in our real estate business revenue as it increased 26% over the first quarter of this year.
Our adjusted EBITDA was $35 million compared to $37 8 million in the second quarter of last year as was the case with net income adjusted EBITDA was impacted by the real estate business and timing of LNG projects.
Our GAAP diluted earnings per share were $1 per share in the second quarter of 2023 compared to $1 13 per share in the second quarter of 2022.
Our adjusted earnings per share, which exclude the impact of intangible amortization and acquisition related costs were $1 29 per share in the second quarter of this year compared to $1 49 per share in the second quarter of last year on slide 13, you can see that our cash flow from operation.
<unk> during the second quarter were $14 2 million.
Our cash flows from operations for the second quarter were impacted by working capital timing during the quarter, which to a certain extent was driven by the bringing on board of the axiom and <unk> acquisitions.
As of July one 2023, we had $28 $8 million of cash on hand, and our net leverage was one four times.
This net leverage includes the impact of the axiom and <unk> acquisitions, turning now to slide 14, we can see how we are invested capex in our future growth so far this year.
When you look at the $10 2 million of Capex investments, we made in the first half of this year about $8 $4 million related to geospatial growth of this amount $2 million was invested in our new geospatial vessel to expand the capacity of our fleet and which has already been engaged in active projects on.
Another $1 $5 million went towards offshore wind equipment to support the offshore wind growth initiatives.
And about $2 7 million was invested in total bathroom metric lidar sensors for rivers and near shore Geospatial contracts.
We believe these investments along with the strength of our balance sheet position us well for future growth.
I'll now turn it back over to Dickerson for some closing comments. Thank.
Thank you Ed what is our strategy and drivers for future growth.
Let's now turn to slide 15, and you will see mentioned seven focus points to position <unk> for future growth.
Number one we will expand our geospatial leadership, which approaches $300 million said.
It makes us the leader at least in North America for sure in the geospatial activity.
As Ben mentioned International data center expansion from new markets and M&A activity will also be a driver.
We're going to capitalize on the federal infrastructure activity, which we're starting to see begin now in its infancy.
There will always be utility improvements for power distribution and natural gas conversion to LNG and <unk> is positioned very well to capitalize on these opportunities.
We will continue our public sector focus which requires mandated a central services and it's not dependent on economic conditions clean energy and building efficiency.
Always be something that we focus on to grow.
And last but not least is the sustainable infrastructure that Alex mentioned not only in the civil area by the in every aspect of the infrastructure support services, we will look for sustainability.
We remain optimistic and will continue to implement our strategy and stay nimble in our approach based upon market conditions we.
We maintain our 2023 guidance of 878 to 950 million revenues and our GAAP an adjustment EPS guidance will remain the same thank you.
In order to ask a question press Star then the number one on your telephone keypad, we will pause for just a moment to compile the Q&A roster.
And your first question comes from Chris Moore CJS Securities Chris. Please go ahead.
Hey, good afternoon, guys. Thanks for taking a couple of questions.
So revenue growth guide stays at roughly 14%.
Just give me a sense sense, how much of that is.
Is M&A.
We should we expect.
The organic to be in the in the high single digits Chris.
So around 7% or so is what we're planning for.
Got it very helpful.
Backlog of $803 million, just roughly what percentage of that is geospatial is it has it changed significantly year over year.
It's.
Joseph This is <unk>. Thanks, Chris for the question Geospatial has been running about 50% of their turnover and I think that turnover will be about 200 million.
This year so.
Not all of that $803 million of courses is.
Is based on the geospatial activity, so I would say it's about 25%.
Got it very helpful and last one for me, maybe I know the LNG project cycle impacted.
First half can you talk a little bit more about where you are in those project cycles and what the impact would be in the second half of the year.
Well, yes LNG of course is build is what we call a percentage of completion. So it's their estimate of the completion of that eight of projects that they are working on will have vastly impact the revenue that that they choose to generate so we always try to match up.
Labor and revenue at the same time, so they are being more conservative or and they're growing and we think towards the second half of the year. The LNG business because of the percentage of completion will be will be stronger higher but it doesn't depict any slowdown in the LNG.
Process, it's just that it's how they're recognizing the revenue on a percentage of completion basis.
Got it so the accounting related to that should be a little bit of a tailwind for the second half.
Correct correct.
Got it alright, I appreciate it I'll leave it there guys.
Thanks, Chris.
Okay.
Next question comes from Andy Wittmann from Baird. Andy. Please go ahead.
Oh, great. Thanks for taking my questions guys. Good afternoon, I guess I wanted to start just trying to understand the margin profile in the quarter Your G&A line.
It was down pretty substantially in the quarter to $11 $5 million that number had been reliably running in the 17 to.
Gosh, just over $18 million per quarter run rate. So I was wondering.
What the difference was this quarter, perhaps it was maybe accruals for incentive compensation or maybe did you take your I guess you'd call. It a contra expense on the earn out liability that.
<unk> got a benefit from was that does that show up in G&A and I was just hoping you could help us understand.
That item on the income statement.
Absolutely I mean, its the ladder of those that you just mentioned it's the <unk>.
A reversal of an earn out accrual and so if you refer to the.
Reconciliation of GAAP to non-GAAP in the back of the earnings release, Youll see that our acquisition related cost.
Had a reversal of five $3 million on a net basis during the quarter.
That's part of it.
We have.
As you know earn outs.
Built into some of our acquisitions and that was just under.
And earn outs.
It was not met that was.
Reverse during the quarter.
Stonegate.
This milestone the height.
Andy This is <expletive> milestone based there are segments of the earn out that depends on the acquisition.
Not specific to what Ed is mentioning but the earn out does not.
Indicate necessarily that.
They are not.
Operating are correctly.
Revenue wise, but it's that segment of time they were supposed to meet a circuit and the acquisitions may have met a certain revenue base on a certain timeframe. According to the contract and they may not have met it sometimes they'll catch up sometimes they won't.
Got it.
Ed you mentioned that was $5 three net I was wondering there is sometimes you do actually have positive expenses on that and you did some acquisitions in the quarter. So what was the gross number for the.
Six six.
625 was the reversal and like you said we had positive.
Going the other way. So 625 was a reversal on five three was in that <unk> got.
$1 million.
Yes.
That's helpful and then.
I was just wondering just in terms of the cash flow because you did have some working capital build here you talked about timing I guess.
Yes.
What are you guys now thinking for the year and some of the things that got you in the quarter for working capital usage have you collected those items here as it stands here in early August in the third quarter.
Yes, I would expect for.
Working capital too.
The impact of working capital.
Terms of the cash flows in the second half to improve.
What happens often times when you have <unk>.
Acquisition the size of of axiom is that.
In the weeks following.
In the first few months following the acquisition your euro.
Our collections in certain working capital components may not may not fall into place during that that immediate post acquisition post closing period. So I think that will recover during the second half.
We should see improvements in our cash flow from operations.
Got it Okay and then just my final question.
I guess I just wanted to try to understand.
The level of confidence you have here in the second half because.
For the first half of the year earnings are down slightly you guys just talked about a 7% organic growth rate, which would suggest that your your back half organic growth rate to make 7% for the year would have to be into the double digits given that youre just started out a little down in the first half of the year. So what are the business lines that you see.
<unk> accelerate to the green the degree needed to hit these levels for the second half.
Well.
This is <expletive> Thanks, Andy I think if you just youre not just we're not just relying purely on organic growth, but total growth. So there'll be some acquisitions also that will be part and it looks like it was going to be just pure organic would have to be a growth rate of 13%, but we're not expecting that.
It does not show any.
Any revenue or input from our recent acquisition, we just did our bread and so it'll look for or look for us to depend both on the organic the organic growth of the company and growth. So that we may do through.
Through acquisitions as far as the specific areas that we're looking at I don't want to get too specific but we are still looking at we have phenomenal opportunities in technology for acquisitions in the geospatial area technology areas, such as Red and also we're looking for some very good.
<unk> and our core business. So those we all anticipate.
Not knowing if all of those will come in but we certainly anticipate some of those two to help the second half of the year.
Okay, just I just want to make sure that I'm clear on that then so just as it as it relates to the guidance.
Did I hear you say that red is not in the guidance and are there and if that's right or wrong, but then.
Comment on that but did you also are you also suggesting that there are acquisitions in guidance that are not announced publicly is that what youre, saying.
I'm not I'm not saying neither.
So let me say, what I did say.
Red.
Of course is included in our guidance because we have it was not included in that revenue that was reported because we didn't own it at the time, but it certainly the revenue we're expecting and the guidance for the second half of the year.
And we're assuming I'm, just saying if you look at the model and look at what we've done and looked at our guidance. Then you are assuming that all of that.
Collectively not you personally, but collectively one would assume that it's just going to be organic growth I'm, saying that we are both active in acquisitions and organic growth. So you'd have to look at a combination of that and Thats why we have a little bit more of a comfort level with our guidance given for the rest of the year.
Okay that makes sense. Okay. Thank you very much have a good night.
Thank you. Thank you.
As a reminder, in order to ask a question Press Star then the number one on your telephone keypad.
Your next question comes from David Marsh Cingular Research David go ahead.
Okay.
Hi, guys. Thanks for taking my questions.
Just to follow up a little bit.
On that last question, especially in regards to your top line guidance being maintained.
And how we think about that.
Business and potential seasonality.
Would there still be an expectation that the fourth quarter would be a little bit lighter than the third quarter from a revenue perspective.
Well, if if we were looking at things in the rearview mirror and it's always been that our fourth quarter is <unk>.
Not not as strong as the third quarter. However, the fourth quarter can be is really is affected by many things as affected by weather is affected by what accruals. We may have in place and what we.
We've left but the fourth quarter and B, it's not.
As.
Weak as the first quarter, but it's certainly not usually is strong we just.
But we.
We can't make any assumptions.
In this in this case the growth that it would be this particular year as <expletive> mentioned, the fourth quarter as always.
<unk>.
It could go either way right.
But in this particular year the way, we see the backlog rolling out we see Q3 revenue in Q4 revenue very very similar in terms of their run rates and.
And it's also dependent on weather.
Alright.
So I mean to meet that top line number as was alluded to by.
Some of the previous callers I mean, you've been asked to put up some pretty pretty sizable numbers here in the second half and.
I guess I just like to understand.
Yes.
You get the confidence in terms of.
Just in terms of the pipeline and the backlog that it is going to come through.
Kind of in this quickly in order to be able to help you meet those numbers just just really don't want to see you guys ask the audience here in the future.
Well, obviously, we have more confidence that you seem to have we work here. So we get to see things a little bit a little bit clear than you may have seen things, but we expect.
We've we've had a history of of meeting our guidance and we feel comfortable with.
With what can be expected.
We certainly see things that perhaps you have you don't have the ability to see right now.
And we may have an advantage there.
Sure sure absolutely.
And then just kind of turning to the balance sheet, a little bit obviously, you guys over the leverage here to make some of these recent acquisitions, particularly some of the bigger ones would the expectation be that.
Generate positive free cash flow, you'll you'll pay that pay down that debt.
What's kind of what would you say is your kind of ideal.
Debt profile for the company.
Yes, I mean as I mentioned earlier, our leverage right now is one four times, which is relatively low versus some of our competitors and so we feel very comfortable with that as we as we add acquisitions to the balance sheet.
Some two things first of all some of those.
Purchases may be.
Funded through our cash from operations.
And then just going forward any.
Excess cash that we've got coming in through our cash flows we would we.
We would try to pay down as much of that leverages possible.
Okay.
Pretty pretty obviously, a pretty sizeable bump up sequentially in <unk>.
Dressed expense so I'm sure that.
Just in the current rate environment, there'd, probably be some desire to.
Chisel that down a little bit.
That back down.
A lower number.
Yes, and by the way, we did pay down during during the quarter and maybe you don't consider the acquisitions, we actually.
<unk> paid down around.
Around $13 million or so so far this.
During the first half of the year. So we have been on that.
<unk> of paying down the debt and then when an acquisition comes along we if there is a need to fund some of that through the facility then we add to that.
That is needed.
Our our focus is on good acquisitions in terms of return on capital while at the same time.
Deleveraging as much as possible throughout that period.
Right. Okay, alright, thanks, guys. Good luck for the second half and I appreciate you taking the questions.
Thank you.
Next question comes from Rob Brown Lake Street Capital markets. Rob. Please go ahead.
Good afternoon.
Interconnect.
Alright.
I just wanted to fall back up on the real estate transaction business had some pretty good stabilization in the quarter.
How is that looking for the back half of the year and I guess, what's sort of the some of the dynamics, there that's allowing them to stabilize.
Yeah.
Well it improved in this last reporting quarter.
We're seeing some.
We're seeing.
Some buildup in their backlog and where we've seen some improvement it's more in the government areas Thats, where we have two groups that are transactional real estate one of them is subprime primarily works with.
Fannie Mae and Ginnie Mac and so we've seen some improvement in <unk>.
That area and overall, we're just we're starting to see.
Improvement they continue to be remain profitable.
There are certainly under certainly under where they were last year by about $15 million, but we're starting to see some improvement.
In revenue 50 million of revenue.
Yes.
Okay. Okay, great. Thank you and then and then on the on the Red acquisition.
Seems like a good fit in the building area.
How does that sort of fit in terms of cross selling and getting.
Synergies building area collaborate on how that fits with what you've been doing.
Well the cross selling from any of our international operations has really been in.
Offshoring work that they do work for.
Our offices in the U S. So we would hope that some of our increased capability with Red Bull.
Improve on the cross selling and offshoring work that they can be doing for our operations in the states.
Okay, great. Thank you and congrats on a nice quarter.
Thank you.
Your next question comes from Jeff Martin from Roth, and Ken Jeff Go ahead.
Thanks, Good afternoon, everyone.
Jack I apologize if some of these questions overdone and I hopped on the call a bit late.
What is the what was the impact from the LNG business. It sounds like it was more of a timing issue than at end of project.
Situation.
If you already covered that if you could repeat it that would be helpful. If not then.
Look forward to hearing more about it.
Well, the LNG business as a percent of completion bid.
Business. So they bill on an estimate of where they think things are.
Complete and so the project, although the projects. They are working on we felt a steady buildup as it gets into the third and fourth quarter. They were recognizing a percent issue that completion lower than they have done traditionally.
Okay.
It's also Jeff. It's also think about it is these are large larger contracts lower volume and so when you compare one year to the other.
Any little timing differences in terms of when things get started just kind of push things to the right and which is what happened. So there's a lot of demand and a strong backlog for the business. It's really more just a timing issue.
And it really relates more to the first half of last year versus the first half of this year I think the second half will be.
<unk> will be.
Slightly up from what it was last year, so just a timing issue.
Okay, and then on the real estate transaction side my understanding was that the comparisons in the second half of this year has gotten much easier relative to last year are you expecting that business to be.
Above last year or are we still in that period of recovery mode, where it may take a couple more quarters before it.
Before the comps become sufficiently easy to pose real estate transactions growth.
Yes.
We're not anticipating the real estate transaction business to be what it was last year.
It's slowly coming back, but it just it depends on interest rates and the appetite that.
The one side is a very large portfolio of business and so they are very dependent on interest rates and the other piece of the business that I said was Fannie Mae or <unk> are also very dependent on mortgage rates that they can get so.
We see a slow coming back it's a profitable business, it's quite scalable, but we don't anticipate it anticipates this year that to be what it was last year.
Okay, Great and then one more if I could with the new.
New Geospatial Ocean vessel.
<unk> delivered.
What is the offshore wind opportunity.
Like in terms of start to see some revenue generation and some growth in geospatial and related to that.
So when the opportunity is.
Is that a 2024 event or even further out.
Yes, we just spoke to.
The people running the Geodynamics group, which has the vessel that that project has been delayed but they are.
Very enthusiastic about the growth of the wind wind farm in and so we are we're seeing much more of the revenue to be generated in 2024, then 2023.
Excellent. Thank you.
Okay.
Next question comes from Tate Sullivan Maxim Group. Please go ahead.
Thank you I'll take you mentioned for 2023 initiatives rare Earth minerals geospatial work is that already a meaningful portion of what you're doing geospatial or is it mostly U S. Geological survey can you give me some more background on <unk>, it's an additive to our geospatial plat.
Form we're just positioning ourselves now to take advantage of that market. So it's really and it's a very the genesis and beginning stage of that and the contribution to revenue, but we see an increase in our defense work through axiom and we see a defense in the geospatial work.
And Alex mentioned, the envision from software and so we think that they will be more of a contributor than the.
The rare Earth for this year, we will see some revenue from them on that.
The piece of the business.
Okay, and then the opportunity with <unk> and digital twin what is that to you referred to that in the analyst day as well.
Well I think I'm good.
On the call I'm going to defend the first event.
What we see as the opportunities with us.
With them in that band and Alex had been working much closer to that.
And I have been.
Yes, it's been year over year.
Basically what would that side of the business, where we are much more traditional services. For example, we are MEP group when we go in and do a tenant improvement job will now scan the spice using the GI special scanners and create a digital twin for Matt, whereas more traditionally we would do that with manual measurements.
Us too.
A more comprehensive solution to the client actually set us up for an ongoing contract off the back of that.
What was more traditionally a one off project.
Great. Okay. Thank you for that okay great.
Yeah.
Next question comes from Marc Riddick Sidoti Mark. Please go ahead.
Hey, good evening.
Yes.
So a lot of my questions have been answered I did want to start though why don't you talk a little bit about <unk> and sort of how that was initially sort of beginning to show up maybe you could talk a little bit about.
<unk>.
The what youre seeing relative to maybe what expectations may have been as to the types of what types of projects, you're seeing or or the types of visibility that might be coming from that and then I had just one other follow up.
So I think the expectation that we had is pretty much what we're seeing I think the public expectation may have been.
We have a waterfall of projects as a result of the bill.
In fact, what we're seeing is the initial start is coming through some of the grant writing opportunities and as those go into the design phase will be in a position to perform designed when it goes to construction will be there for the project management.
From our expectation it's basically.
Meeting meeting our expectation.
Okay, and then just as a quick reminder, so earlier in the year there was a weather impact on construction certainly in that certainly wasn't just us.
Something that affected yourselves with many others, particularly in northern California, I was wondering if you could talk a little bit about how that is.
Is there expectation for some of that to have been delayed and flow through later or maybe you can sort of bring us up to date on maybe.
Whats taken place specifically with that.
With that market. Thank you.
So many of our projects were clearly impacted by weather, we felt very strongly in Q1 and what it does is essentially just move the revenue to the right. The projects arent terminate that theyre not stopped but they are delayed.
Sometimes the delayed carried on a little further than even when the weather is clear there still be some areas where excavations for example had already been Doug, but they are not filled with water. So theres a number of ripple effects that happened as a result of.
The severe weather.
Makes sense. Thank you.
Youre welcome.
Alright at this time. This concludes our question and answer session and I would like now to turn the call back over to Mr. Wright for closing remarks.
Thank you operator, I think if you see the tagline of MB five Theres, a quote after beyond engineering and what.
What do we mean by that or what does it mean to be that we wanted to be beyond engineering, well, let me mention a few examples and the reason for that strategy.
<unk> <unk>.
The Earth's population increases, we must deliver infrastructure and services in a more efficient manner that is just understood.
So our strategy is to have a natural intersection between technology and our traditional engineering services. So that we can deliver the infrastructure services that we can help deliver that.
In a more efficient basis.
And prove that delivery, so let's mentioned a few specific technology and improvements.
The improvements that we make to go beyond the traditional engineering we.
We use geospatial services and software and all forms of artificial intelligence to improve infrastructure support.
Examples of our geospatial mapping up.
Transition lines improves the delivery of utility services.
We use the latest geospatial technology to monitor coastline erosion and the delivery of clean water sources.
Our mission critical business delivers it in.
And fiber optic.
To improve system designed for our commercial services.
We formed a building digital group, which marries our building analytics information modelling to deliver.
Our bim and digital twin platforms that we've mentioned previously.
This all becomes an integrated part of our transition to the MEP design into all forms of.
Infrastructure delivery.
Our software technology developed set product named invasion, you've heard Alex mentioned that which enables us to measure sustainable infrastructure delivery.
All of these that this technology helps us to strengthen our core platform and gives us a competitive edge.
For this reason, we feel very optimistic about the future growth of <unk> five.
And we feel it gives us a competitive advantage in the marketplace. So we look forward. This wound bleed our call for the quarter and what we've done and we look forward to being with you in the second half of the year and we're very optimistic about the future of NV five thank you.
Thank you all for joining you may now disconnect.
Okay.
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Yes.
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